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Investing.com - Truist Securities raised its price target on Packaging Corp. of America (NYSE:PKG) to $262.00 from $238.00 on Wednesday, while maintaining a Buy rating on the stock. According to InvestingPro data, PKG currently trades at a P/E ratio of 21.1x and demonstrates strong financial health with a "Good" overall rating.
The price target increase follows PKG’s August 31 completion of its acquisition of Greif’s containerboard assets, which Truist views positively for providing PKG with increased scale and additional capacity to its highly utilized system.
The acquisition allows PKG to avoid significant capital expenditures it would otherwise need to expand its legacy mills for greater volume growth and minimize box plant spending given the new Dallas plant.
As a result of the acquisition, Truist expects PKG’s capital expenditures could decline by at least $100-200 million in 2026 compared to $855 million this year.
Truist also noted that with strong cash flow from legacy PKG assets and the Greif containerboard acquisition, combined with lower capital expenditures, PKG could be positioned to meaningfully increase its dividend in the coming quarters. The company has already maintained dividend payments for 23 consecutive years, with a current yield of 2.36%.
In other recent news, Packaging Corporation of America has announced its second-quarter earnings, with Citi forecasting an 11% year-over-year increase in EBITDA to $447 million, slightly above consensus estimates. The growth is attributed to modest volume increases and price improvements in the Packaging segment, although the Paper segment may remain flat. Additionally, the company has declared a quarterly dividend of $1.25 per share, payable on October 15, 2025, to shareholders of record as of September 15, 2025. In a significant move, Packaging Corporation of America has priced $500 million in senior notes due 2035 to finance its acquisition of Greif, Inc.’s containerboard business. The transaction, valued at $1.8 billion, includes two mills and eight plants, with an expected closure by the end of the third quarter of 2025. Citi has maintained its Neutral rating and $197.00 price target on the company’s stock. Meanwhile, Cascades Inc., a competitor, is closing a facility in Niagara Falls, NY, which Citi suggests could positively impact the sector. These developments reflect Packaging Corporation of America’s strategic moves in the market.
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